At a Ceremony in Nigeria: Brothers Fighting Fraud Charges from India Flourish in Nigeria

At a ceremony in November, the Nigerian government celebrated the discovery of as many as 1 billion barrels of oil in the country’s arid northeast, almost 1,000 kilometers (621 miles) away from the crude-rich Niger Delta. The state's partners in the multi-billion-dollar project in the impoverished, landlocked corner of the country are two brothers from India who have built the largest independent oil company in Africa's biggest crude-producing nation. However, even as the Nigerian government embraces them, India pursues the brothers as criminals, accusing them of perpetrating "one of the largest economic scams in the country."

Introduction

The discovery of a significant oil reserve in Nigeria's arid northeast has become a cause for celebration in the country. The Nigerian government, at a ceremony held in November, expressed its optimism about the multitude of opportunities and great prosperity this discovery would bring. However, what makes this development particularly intriguing is the involvement of two Indian brothers, Nitin and Chetan Sandesara, who have managed to build the largest independent oil company in Nigeria despite facing fraud charges in their home country.

The Sandesara Brothers' Role in Nigeria

Nitin and Chetan Sandesara, Gujarati businessmen who left India in 2017, have denied the allegations of defrauding public banks of over $1.7 billion. They claim to be victims of political persecution, and as problems mounted in India, they shifted their focus to Lagos, Nigeria. The Sandesara brothers, who have been active in the Nigerian oil industry for almost two decades, won two onshore licenses in the Niger Delta. More recently, they have been associated with Lagos and have even applied for Nigerian citizenship.

Their ventures in Nigeria have flourished, despite the fraud charges and non-bailable warrants from India. The African nation has refused to arrest them, citing the political nature of the allegations made by the Indian government. In fact, a letter published by the Organized Crime and Corruption Reporting Project stated that the Indian allegations "appeared to be political in nature." This has provided the Sandesara brothers with a haven in Nigeria, shielding them from the troubles they face back home.

Flourishing Business in Nigeria

While battling fraud charges and warrants from India, the Sandesara brothers' businesses have thrived in Nigeria. Their Nigerian oil and gas business, with the slogan "Success is Natural," has become a significant player in the country's oil industry. The group's subsidiaries, Sterling Oil Exploration & Production Co. and Sterling Global Oil Resources Ltd., currently pump approximately 50,000 barrels of crude oil per day in the Niger Delta through contracts with the state-owned Nigerian National Petroleum Co. Furthermore, another unit of their business expects to bring a third block into production this year, which will eventually raise their total daily output to over 100,000 barrels.

In addition to their impressive production capacity, the Sandesara family is also one of the top exporters of oil from Nigeria. The taxes paid by their firms contribute around 2% to the Nigerian government's revenue, as stated by Nitin Sandesara in 2019. Their success can be attributed, in part, to their innovative approach of using an export system that involves transporting crude oil on barges to a floating storage vessel in the Atlantic Ocean, rather than relying solely on vulnerable pipelines.

Nigerian Government's Support

The Sandesara brothers have secured significant support from the Nigerian government. They have hired a well-connected former head of Nigeria's oil regulator to lead their energy operations. Additionally, they have concluded major contracts with the state, including a deal with the Nigerian National Petroleum Co. for the commercialization of gas within one of their oil blocks. This project aims to improve Nigeria's power supply, which has been historically inadequate.

Their reliability and ability to deliver on commitments have been acknowledged by Mele Kyari, the Chief Executive of the Nigerian National Petroleum Co. He praised Sterling Oil, stating, "You are a very reliable partner because when you say things, you get them done." This demonstrates the level of trust and confidence placed in the Sandesara brothers' companies by the Nigerian government.

Fraud Charges and Legal Battle

While the Sandesara brothers have been successful in Nigeria, their businesses in India have been mired in legal troubles. Starting in the 1980s, the brothers transformed their family tea-trading business into a conglomerate spanning various industries, including oil and gas, healthcare, and construction. However, the rapid expansion of their empire was allegedly fueled by an extensive economic fraud scheme.

According to India's Central Bureau of Investigation (CBI), the Sandesara group, by the early 2010s, had amassed debts of over 140 billion rupees ($1.71 billion) owed to public lenders such as State Bank of India, Bank of Baroda, and Union Bank of India. The CBI accused the brothers of using false and fabricated documents to secure bank loans and diverting funds overseas. The same lenders that provided credit lines to their Indian companies also extended financial support to the entity that owned their Nigerian oil business, according to a charge sheet filed by the CBI in December 2019.

In 2018 and 2021, UK courts ruled in favor of state-backed lenders, ordering Sandesara companies to pay nearly $60 million after defaulting on loans. Furthermore, India's Enforcement Directorate (ED), responsible for investigating money laundering and forex violation cases, expressed its intention to seize the brothers' overseas assets, including a Nigerian oil field, four drilling rigs, and a Gulfstream aircraft.

Nigerian Business as a Shield

Despite the legal battles in India, the Sandesara brothers have found refuge and success in Nigeria. The Nigerian government has refused India's request to extradite them, citing political motives behind the allegations. The Sandesaras' Nigerian companies have continued to thrive, even as the brothers faced legal challenges in their home country.

The Sandesara brothers have embraced their Nigerian venture, with one of their subsidiaries claiming ownership of Sterling Oil, the prominent company responsible for the majority of their crude oil production. Although there have been reports suggesting that the ownership lies with another family member, Devak Patel, no clarification has been provided regarding the company's ownership. The Sandesaras' ties to Nigeria seem to be deepening, with ongoing projects and partnerships with the Nigerian government.

Future Prospects in Nigeria

With Nigeria's newly elected President Bola Tinubu setting ambitious targets for the country's hydrocarbons sector, independent producers like Sterling Oil are poised to play a significant role. International oil giants such as Shell and ExxonMobil are retreating from Nigeria, leaving opportunities for local players to fill the void. Tinubu aims to increase Nigeria's daily oil output by over 60% to 2.6 million barrels by 2027 and to 4 million barrels by 2030, a target that some analysts consider implausible. To achieve these goals, the incoming government will heavily rely on independent producers like Seplat Energy Plc and Sterling Oil.

At a ceremony celebrating the oil discovery in Nigeria's arid northeast, President Tinubu expressed optimism, stating that the project would provide numerous opportunities and great prosperity for Nigeria. Sterling Oil's Chief Operating Officer, Mohit Barot, assured the president that the company had secured funding for the project and pledged to deliver on their commitments.

Despite the ongoing legal battles and fraud charges faced by the Sandesara brothers, their businesses in Nigeria continue to thrive. As Nigeria seeks to strengthen its position in the oil industry and attract investment, the Sandesaras' companies seem poised to contribute to the country's economic growth and play a prominent role in its hydrocarbons sector.

Conclusion

The Sandesara brothers' story is a tale of contradictions. While they face fraud charges and warrants in India, their businesses in Nigeria have achieved remarkable success. They have built the largest independent oil company in Nigeria, pumping thousands of barrels of crude oil daily and contributing significantly to the country's revenue. Despite the ongoing legal battles and controversies surrounding their operations, they have secured major contracts with the Nigerian government and enjoy support from key figures in the energy sector. As Nigeria seeks to expand its oil production and attract investment, the Sandesara brothers' companies appear poised to play an increasingly prominent role in the country's hydrocarbons sector.

FAQs

1. Who are the Sandesara brothers?

The Sandesara brothers, Nitin and Chetan, are Gujarati businessmen who have built the largest independent oil company in Nigeria. They face fraud charges in India and are accused of perpetrating one of the largest economic scams in the country.

2. What are the fraud charges against them?

The Sandesara brothers are accused of defrauding public banks in India of over $1.7 billion. They are alleged to have used false documents to secure bank loans and divert funds overseas.

3. Why are the Sandesara brothers flourishing in Nigeria despite the charges?

The Nigerian government has refused to arrest the Sandesara brothers, citing the political nature of the allegations made by the Indian government. They have built successful businesses in Nigeria, with significant production capacity and export capabilities, contributing to the country's oil industry and revenue.

4. What is the significance of their involvement in the new oil development project in Nigeria?

The Sandesara brothers' companies are involved in a new oil development project in Nigeria's arid northeast, where a significant oil reserve has been discovered. Their participation in this project demonstrates their influence and prominence in Nigeria's oil sector.

5. What are Nigeria's goals for oil production, and how likely are they to be achieved?

Nigeria aims to increase its daily oil output to 2.6 million barrels by 2027 and 4 million barrels by 2030. Achieving these targets will require collaboration with independent producers like the Sandesara brothers' companies. While the goals are ambitious, their realization depends on various factors such as investment, infrastructure development, and stability in the oil market.